Can a united front of media owners resist Xinhua's push?

<P>The announcement of new restrictions on the operations of foreign media organisations in China this month shows that Beijing's handle on capitalism is firm, although its international PR strategy may need some finessing.<BR>The rules make the main government news agency, Xinhua, the gatekeeper for all wire services and information sales in China, as well as reaffirming government censorship rules over what it views as potentially destabilising reports.</P> <P>The fact that the rules have been announced is not altogether surprising; the censorship rule simply reflects what already goes on in China, and little will change in that respect. And Xinhua - a huge, 13,000-strong organisation - has been unabashed about its determination to expand. The head of Xinhua, Tian Congming, says he wants to put Reuters and Bloomberg out of business in China, and replace them with Xinhua.</P> <P>None of this has made the announcement no more palatable, however. Hackles immediately went up among local pro-democracy groups and in the West. Premier Wen Jiabao, on a visit to Britain, responded that China's 'open policy' remained unchanged.</P> <P>And market-watchers say this is probably true. Beijing's strategy likely has less to do with stopping reporting on Falun Gong or reaffirming China's claim to Taiwan. This issue, they say, comes down to money. "A lot of people like to ascribe some political significance to this, but in reality, this is a commercial matter and an effort to bolster Xinhua," says David Wolf, president of Beijing-based media and tech consultancy Wolf Group Asia.</P> <P>The news and financial wire service industry is worth an estimated US$100 million a year, funded mainly by Chinese banks and brokerages. Xinhua wants a bigger slice of the action. The new rules allow it to demand a percentage of revenues from the international wires, though for exactly what in return isn't clear.</P> <P>In fact, much of how the rules will impact on the media business remains unclear, and the foreign news organisations in the firing line are staying diplomatically quiet while they get their strategies together. Bloomberg declined Media's request for comment altogether, and Dow Jones would say only that it was "studying the new rules and considering what measures might be taken".</P> <P>"The question is, is Xinhua a regulator or a competitor for these organisations," says Wolf. "What I think the news organisations would like to see is a clear division. In all other media areas in China, whether it's print, TV or film, you've got very clear separation between the regulator and the competitors, and that doesn't happen in this case."</P> <P>This issue has come up before, and a decade ago, the media owners - backed by Western governments - managed to have the measures announced then, which included demands for a share of revenue, watered down. It took two years of high-level wrangling to achieve that, however. </P> <P>There is more at stake this time, though. Xinhua is stronger and more determined, and it will take a similarly determined effort by media owners to resist the current push for change.</P>